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NEWS UPDATES 11 September 2009

Malaysia’ Proton restarts talks with VW

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Proton Holdings Bhd is in talks with Volkswagen (VW) that could lead to a strategic partnership and the assembly of vehicles at the national carmaker’s plant in Tanjung Malim, the Starbiz reported.

The partnership was not expected to see the German auto giant taking an equity stake in Proton but a collaboration in platforms and engines was likely being negotiated, said market sources.

The talks between Proton and VW come at a time when DRB-HICOM Bhd is also engaged in discussions with the German company to assemble cars in Pekan.

“For the long term of the company, it (Proton) needs a partner because the size of Malaysia’s market might not be enough to sustain an independent producer,’’ said UOB KayHian research head Vincent Khoo.

News that Proton is again in talks with VW is somewhat surprising as both parties have come to, and walked away, from the negotiating table numerous times.

A couple of years ago, Proton came close to inking a deal with VW which would have seen the German company taking a stake in the national carmaker.

A last-minute pitch by the Proton management to build on the company’s own “green shoots” then persuaded the Government from sealing an agreement with VW.

Proton found commercial success following the launch of the Persona but did not escape the global recession caused by the US financial crisis.

Its finances have improved with the launch of the Exora and for its first quarter ended June 30, it reported a net profit of 54.6 million ringgit (1$=3.8 ringgit). The company’s shares closed three sen lower at 3.71 ringgit Thursday.


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